§ 5-35 — Disclosure requirements

Illinois § 5-35

• Jurisdiction: Illinois
• Topic: BUSINESS AND EMPLOYMENT
• Ch. 815: BUSINESS TRANSACTIONS
• Act 815 ILCS 602/: Business Opportunity Sales Law of 1995.
• Art.: Article 5 -

Text

(a) It shall be unlawful for any person to offer or, sell any business opportunity required to be registered under this Law unless a written disclosure document as filed under subsection (a) of Section 5-30 of this Law is delivered to each purchaser at least 14 days prior to the execution by a purchaser of any contract or agreement imposing a binding legal obligation on the purchaser or the payment by a purchaser of any consideration in connection with the offer or sale of the business opportunity. (b) The disclosure document shall have a cover sheet which is entitled, in at least 10-point bold type, "DISCLOSURE REQUIRED BY THE STATE OF ILLINOIS." Under the title shall appear the statement in at least 10-point bold type that "THE REGISTRATION OF THIS BUSINESS OPPORTUNITY DOES NOT CONSTITUTE APPROVAL, RECOMMENDATION OR ENDORSEMENT BY THE STATE OF ILLINOIS. THE INFORMATION CONTAINED IN THIS DISCLOSURE DOCUMENT HAS NOT BEEN VERIFIED BY THIS STATE. IF YOU HAVE ANY QUESTIONS OR CONCERNS ABOUT THIS INVESTMENT, SEEK PROFESSIONAL ADVICE BEFORE YOU SIGN A CONTRACT OR MAKE ANY PAYMENT. YOU ARE TO BE PROVIDED 10 BUSINESS DAYS TO REVIEW THIS DOCUMENT BEFORE SIGNING ANY CONTRACT OR AGREEMENT OR MAKING ANY PAYMENT TO THE SELLER OR THE SELLER'S REPRESENTATIVE". The seller's name and principal business address, along with the date of the disclosure document shall also be provided on the cover sheet. No other information shall appear on the cover sheet. The disclosure document shall contain the following information unless the seller uses a disclosure document as provided in paragraph (1) or (2) of subsection (a) of Section 5-30 of this Law: (1) The names and residential addresses of those salespersons who will engage in the offer or sale of the business opportunity in this State. (2) The name of the seller, whether the seller is doing business as an individual, partnership or corporation; the names under which the seller has conducted, is conducting or intends to conduct business; and the name of any parent or affiliated company that will engage in business transactions with purchasers or which will take responsibility for statements made by the seller. (3) The names, addresses and titles of the seller's officers, directors, trustees, general managers, principal executives, agents, and any other persons charged with responsibility for the seller's business activities relating to the sale of the business opportunity. (4) Prior business experience of the seller relating to business opportunities including: (A) The name, address, and a description of any business opportunity previously offered by the seller; (B) The length of time the seller has offered each such business opportunity; and (C) The length of time the seller has conducted the business opportunity currently being offered to the purchaser. (5) With respect to persons identified in item (3) of this subsection: (A) A description of the persons' business experience for the 10 year period preceding the filing date of this disclosure document. The description of business experience shall list principal occupations and employers; and (B) A listing of the persons' educational and professional backgrounds including, the names of schools attended and degrees received, and any other information that will demonstrate sufficient knowledge and experience to perform the services proposed. (6) Whether the seller or any person identified in item (3) of this subsection: (A) Has been convicted of any felony, or pleaded nolo contendere to a felony charge, or has been the subject of any criminal, civil or administrative proceedings alleging the violation of any business opportunity law, securities law, commodities law, franchise law, fraud or deceit, embezzlement, fraudulent conversion, restraint of trade, unfair or deceptive practices, misappropriation of property or comparable allegations; (B) Has filed in bankruptcy, been adjudged bankrupt, been reorganized due to insolvency, or was an owner, principal officer or general partner or any other person that has so filed or was so adjudged or reorganized during or within the last 7 years. (7) The name of the person identified in item (6) of this subsection, nature of and parties to the action or proceeding, court or other forum, date of the institution of the action, docket references to the action, current status of the action or proceeding, terms and conditions or any order or decree, the penalties or damages assessed and terms of settlement. (8) The initial payment required, or when the exact amount cannot be determined, a detailed estimate of the amount of the initial payment to be made to the seller. (9) A detailed description of the actual services the seller agrees to perform for the purchaser. (10) A detailed description of any training the seller agrees to provide for the purchaser. (11) A detailed description of services the seller agrees to perform in connection with the placement of equipment, products or supplies at a location, as well as any agreement necessary in order to locate or operate equipment, products or supplies on a premises neither owned nor leased by the purchaser or seller. (12) A detailed description of any license or permit that will be necessary in order for the purchaser to engage in or operate the business opportunity. (13) The business opportunity seller that is required to secure a bond under Section 5-50 of this Law, shall state in the disclosure document "As required by the State of Illinois, the seller has secured a bond issued by (insert name and address of surety company), a surety company, authorized to do business in this State. Before signing a contract or agreement to purchase this business opportunity, you should check with the surety company to determine the bond's current status.". (14) Any representations made by the seller to the purchaser concerning sales or earnings that may be made from this business opportunity, including, but not limited to: (A) The bases or assumptions for any actual, average, projected or forecasted sales, profits, income or earnings; (B) The total number of purchasers who, within a period of 3 years of the date of the disclosure document, purchased a business opportunity involving the product, equipment, supplies or services being offered to the purchaser; and (C) The total number of purchasers who, within 3 years of the date of the disclosure document, purchased a business opportunity involving the product, equipment, supplies or services being offered to the purchaser who, to the seller's knowledge, have actually received earnings in the amount or range specified. (15) Any seller who makes a guarantee to a purchaser shall give a detailed description of the elements of the guarantee. Such description shall include, but shall not be limited to, the duration, terms, scope, conditions and limitations of the guarantee. (16) A statement of: (A) The total number of business opportunities that are the same or similar in nature to those that have been sold or organized by the seller; (B) The names and addresses of purchasers who have requested a refund or rescission from the seller within the last 12 months and the number of those who have received the refund or rescission; and (C) The total number of business opportunities the seller intends to sell in this State within the next 12 months. (17) A statement describing any contractual restrictions, prohibitions or limitations on the purchaser's conduct. Attach a copy of all business opportunity and other contracts or agreements proposed for use or in use in this State including, without limitation, all lease agreements, option agreements, and purchase agreements. (18) The rights and obligations of the seller and the purchaser regarding termination of the business opportunity contract or agreement. (19) A statement accurately describing the grounds upon which the purchaser may initiate legal action to terminate the business opportunity contract or agreement. (20) A copy of the most recent audited financial statement of the seller, prepared within 13 months of the first offer in this State, together with a statement of any material changes in the financial condition of the seller from that date. The Secretary of State may accept the filing of a reviewed financial statement in lieu of an audited financial statement. (21) A list of the states in which this business opportunity is registered. (22) A list of the states in which this disclosure document is on file. (23) A list of the states which have denied, suspended or revoked the registration of this business opportunity. (24) A section entitled "Risk Factors" containing a series of short concise statements summarizing the principal factors which make this business opportunity a high risk or one of a speculative nature. Each statement shall include a cross-reference to the page on which further information regarding that risk factor can be found in the disclosure document. (25) Any additional information as the Secretary of State may require by rule, regulation, or order.

Legislative History

(Source: P.A. 96-648, eff. 10-1-09.)